Publications

How could financial actors manage their exposure to climate risks?

4 May 2017 - Climate Brief - By : Morgane NICOL / Ian COCHRAN, Phd

Financial actors should integrate a forward-looking climate assessment into their procedures and models

In order to manage climate-related issues in their portfolios, financial actors will need in the long run to incorporate a forward-looking analysis for alignment of their portfolios with a 2°C pathway into their risk management and investment decision-making processes. Such analysis would need to be based on scenarios that represent different pathways for decarbonisation of the economy, and more specifically a 2°C pathway, broken down into quantitative variables of financial impact of the risks and opportunity for low-carbon transition.

A number of constraints currently limit their ability to conduct such an assessment

However, certain constraints currently restrict the possibility for financial institutions to carry out such analysis for all of their outstanding investment and financing amounts: the lack of forward-looking information on companies and other counterparties; certain current features of financial models; the lack of breakdown of climate-related scenarios into financial impact variables; the information systems of financial players which need to be adapted; and the lack of training on climate-related issues for their personnel.

However, financial actors should begin today to implement initial actions

Nonetheless, financial players can start as of today to progressively roll out a certain number of preliminary actions:

  • Encouraging their counterparties to issue forward-looking information on their own alignment with a 2°C pathway, for example by following initial TCFD guidelines;
  • Adopting an internal stance on scenarios on which analyses are to be based, in particular “2°C” scenarios, and thinking about the objectives to be set for each business sector;
  • Adapting information systems so as to be able to collect, store and aggregate new indicators and information on the climate-related issues of counterparties;
  • Adapting the financial models used;
  • Training all employees on the impacts of climate-related issues for the financial sector;
  • Collecting and analysing the climate-related indicators already available, as detailed in Climate Brief no. 46;
  • Putting in place a governance system that will encourage climate-related issues to be taken into consideration by each internal business division.
How could financial actors manage their exposure to climate risks? Download
To learn more
  • 07/09/2025 Blog post
    What’s next for climate finance? From Seville to Belém

    With the dust settling from COP29’s hard-fought negotiations on the New Collective Quantified Goal (NCQG), attention is shifting to how the climate finance goal will be met. The challenge is how to scale up financing for increasingly connected priorities in a challenging landscape of debt stress and cuts in official development assistance.

  • 07/08/2025
    Annex 2 – Methodology note (2025 Edition)
  • 07/02/2025 Foreword of the week
    Bridging the gap: high-level climate & development finance commitments and the reality on the ground

    The 4th International Conference on Financing for Development (FFD4) in Seville represents a milestone for delivering on development (including climate action) goals, a decade after the adoption of the Sustainable Development Goals and the Paris Agreement. The “Seville Commitment” was adopted on June 30th, albeit in the absence of the United States – demonstrating that widespread support remains for a comprehensive package to finance development. However, the outcome also embodies the growing chasm between high-level commitments and the reality of financing for development and climate action on the ground. Recent research by I4CE attempts to bridge this gap on two crucial issues. 

See all publications
Press contact Amélie FRITZ Head of Communication and press relations Email
Subscribe to our mailing list :
I register !
Subscribe to our newsletter
Once a week, receive all the information on climate economics
I register !
Fermer